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How the Plaza was saved

In the beginning, it was the allure of the Plaza that attracted the developer, Elad Properties, to the glamorous, gilded and storied hotel at the corner of Fifth Avenue and Central Park South.

But it was that same allure that drove a politically-charged campaign by the hotel workers’ union that resulted in Elad agreeing to scale back its plan to turn most of the hotel into condominiums and retail space.

“We would have been idiots not to have used the Plaza as the centerpiece to draw attention – at least to city officials – to the crisis that our union faces because of all these conversions into condos,” said John Turchiano, a spokesman for the hotel workers’ union.

Over the course of the campaign which started early this year, the union’s “Save the Plaza” web site was flooded with testimonials.

People shared memories of special evenings at the Plaza and of taking a daughter to see the painting of “Eloise,” the children’s literary character who lived in the hotel, which hangs in the lobby.

Real estate and politics may have been at the center of the controversy, but the possibility of losing a piece of old New York was the biggest concern.

“It’s a huge New York City icon,” said Curt Gathje, author of “At the Plaza, An Illustrated History of the World’s Most Famous Hotel.” “It’s right up there with Rockefeller Center.”

Its mystique is difficult to quantify. Think Jacqueline Kennedy Onassis having tea in The Palm Court, or the Beatles being mobbed outside the hotel by frenzied fans during their 1964 stay, or Truman Capote’s 1966 Black and White ball.

Think debutante balls, Cary Grant in the opening scenes of Alfred Hitchcock’s “North by Northwest” or Macauley Culkin running through its hallways free of parental supervision in “Home Alone 2.”

Even former President Bill Clinton, in his memoir “My Life,” said he once fantasized about being a doorman at the Plaza because they “had nice uniforms and met interesting people from all over the world.”

News outlets around the world from Spain to Japan to Brazil ran stories about the “Save the Plaza” campaign, Turchiano said. The union sent two representatives to Israel, where the parent company of Elad is based, to speak to the media there.

The pressure mounted on Elad to show that it wasn’t out to destroy this piece of New York history.

Elad spokesman Steve Solomon said the company was always sensitive to the hotel’s unique place in the city’s fabric. It never considered an all-condo conversion, making sure to include public space in its plan with a smaller hotel and retail space, he said.

Solomon also denied that Elad ever planned to make major changes to the cherished public spaces of the 98-year-old hotel such as the Palm Court and the Oak Room and Bar.

“At most, Elad planned to spruce those areas up with fresh paint. There was no plan ever to change the architectural features of those spaces,” he said.

But the union’s campaign gained momentum and Mayor Michael Bloomberg stepped in, urging the two sides to talk seriously and even bringing them down to City Hall for the negotiations.

The resulting deal, announced at a Plaza Hotel news conference on April 14 to the cheers of workers, was a clear compromise.

Under the deal, Elad said it would build 150 luxury condos, not 200 as originally planned, still giving the company opportunity for profit on its $675 million purchase price and the $350 million it plans to spend on a renovation beginning April 30.

The union won jobs. Instead of a 150-room boutique hotel, Elad agreed to increase the number of hotel rooms to 350. The union, which represents 900 Plaza workers, was promised at least 350 jobs, 200 more than it originally thought it would get.

“(Elad) gave a bit, the union gave a bit and they came out with a plan they can certainly live with,” Solomon said. “We feel it was a win-win for both sides.”

Also spelled into the agreement was the assurance that the hotel’s ornate lobbies and public spaces would not be changed.

Though concern for the preservation of the Plaza took center stage in the controversy, trends in Manhattan’s real estate market and the mayor’s own political agenda also influenced how the deal was struck.

Jonathan Miller, president and CEO of Miller Samuel, a Manhattan real estate appraisal and consulting firm, noted that an appetite for high-end condos in midtown Manhattan had been fueling a frenzy of conversion of hotels and even office space.

“This (the Plaza) would be a logical project. It’s a tremendous location and a marquee name,” he said. According to Miller, a two-bedroom, 1,200-square-foot condo in the Plaza could expect to sell for $2.5 million or more.

The loss of hotel rooms to condominium conversions had taken its toll on the union. According to Turchiano, 1,100 unionized jobs had been lost in 2004 because hotels had been shut down and converted into condos.

The Plaza plan gave the union the opportunity to turn up the pressure on the city to try to stem some of the job losses.

The union reasoned that retaining hotel rooms was important to the mayor, who is seeking re-election in November and who had made tourism a priority in the city’s development.

Both of the mayor’s big pet projects – the planned Jets stadium on the West Side and a bid to bring the 2012 Summer Olympics to the city – would bring in a lot of visitors who would need places to stay in the city.

On April 5, Bloomberg accepted an invitation to speak at a gathering of the hotel workers’ union at Radio City Music Hall. During his speech, someone yelled out “What about the Plaza?” Others joined in, “Save The Plaza,” according to people in attendance.

The mayor departed from his planned speech and told the workers that while he believes developers have the right to develop their property, he would like to see a larger portion of the Plaza retained as a hotel, especially because tourism is so important to the city’s economy, the witnesses said.

The negotiations began in earnest after the speech, Turchiano said. During the last five days of talks, the parties stayed at the table 12 hours or more. The city’s mediator was Josh Sirefman, a top aide to Daniel Doctoroff, the deputy mayor who heads the city’s Olympic bid.

“The mayor popped his head in on a number of occassions, I’m told, to exhort the parties to keep working,” Turchiano said. “He was personally involved.”

Nine days after the mayor’s speech, the deal was done and everyone involved appeared happy. The mayor had earned the goodwill of an influential union during an election year, the union had successfully campaigned to save 200 jobs, and Elad had weathered a political storm with most of its development plans intact.

“It’s still a very viable deal and most importantly they are going to create what they believe will be the world’s most elegant and fashionable mixed-use property,” said Solomon, Elad’s spokesman. “They’re going to bring the Plaza into the 21st century.”

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